February 8, 2006
Is Kerkorian's Guy Wacky
Enough to Save GM?
General Motors Chairman Rick Wagoner is very pleased to welcome
Jerome York to the board of directors. Sort of like the Bushes are
ecstatic when Ted Kennedy shows up for dinner.
may be a perfectly capable board member, but Wagoner doesn’t really
care. What he cares about is that York is in the camp of Kirk Kerkorian.
Kerkorian is not the suicide doctor. This is a common point of
confusion. (Or at least, this columnist thinks it would be funny if it
were.) But when he starts buying up stock in your company, he tends to
make CEOs start looking around for the nearest cyanide pill.
Kerkorian – a casino, airline and motion picture magnate – first rose to
prominence in the 1980s as a potential hostile suitor for Chrysler
Corporation, threatening to grab control of Lee Iacocca’s empire. A
decade later, Kerkorian took another stab at control of Chrysler, this
time with Iacocca in tow. But when Daimler-Benz beat him to the punch
and got the troops at Chrysler to turn their salutes from Highland Park
to Stuttgart (by way of Auburn Hills), Kerkorian turned his unrequited
affections on General Motors.
out the old girl was easy. Well, that and GM stock is not exactly flying
off the shelves these days. This has allowed Kerkorian to grab control
of nearly 10 percent of it, which makes the establishment types in the
Renaissance Center just a tad nervous.
worry, Kerkorian explains. I’m selling a whole bunch of it for a tax
was December, and the GM brass breathed a sigh of relief.
two months later, Kerkorian suddenly finds himself owning as large a
share of GM as he did before his tax-loss selloff. And the brass are
worry, Kerkorian explains. I plan to be a passive investor. Well, maybe,
perhaps, I might try to control a seat on the board.
probably not. Unless I do.
Jerome York, a consultant to Kerkorian’s Tracinda Corporation, which is
the holding company for – well, for Kirk Kerkorian! Tracinda buys the
stuff Kerkorian wants to control (or “passively” invest in) because
Kerkorian controls Tracinda. As a consultant to Tracinda, York could be
helping Kerkorian with anything from interior decorating to lip balm
application, but I think we can be relatively confident his positions on
the board will be roughly equivalent to Kerkorian’s positions.
Roughly in the same way that low-level Venezuelan bureaucrats believe
what Hugo Chavez believes. And like it!
Rick Wagoner is glad to have York on the board. Really glad! He said so.
brings years of business experience and knowledge of the automotive
industry to the GM board," Wagoner said. "We are pleased to welcome him
to our Board."
It’s fine. York has years of business experience. He has knowledge of
the automotive industry. He’ll be OK. He won’t advocate anything crazy.
early returns: York wants shareholder dividends and executive salaries
cut. (The company made both moves in York's first full day on the
board.) He also wants to get rid of Hummer and Saab, eliminate 30,000
jobs and close 12 facilities. And the brass are getting nervous!
again, with all of GM’s problems, maybe a wacky board member would be a
welcome diversion. And it’s hard to completely write off a guy who is
calling for dramatic changes at GM, because anything good whatsoever
would be a dramatic change for GM these days.
just weeks before his election to the board, issued a major broadside
against GM management – warning, among other things, that the company
had only enough cash left to last it another 1,000 days. Could that be
true? This is a company that makes its money from selling cars but
spends more money paying health premiums than it spends building cars.
stopped clock is right twice a day. Even if you’re paranoid, it doesn’t
mean they’re not after you. York may or may not be the loony handpuppet
of an egomaniacal investor who tries to take over companies for sport.
GM, which has found itself in the dumper after years of “sensible”
decisions, might do worse than to listen to a loon.
© 2006 North Star
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